What is Envelope Budgeting System and how does it work?
The Envelope Budgeting System is a system that helps the user to keep track of and control spending. This is how it works. • Work out a monthly budget. • Then take out some envelopes. Label one envelope for each expense item in your budget. • At the beginning of the month when you receive your take-home pay, fill up the envelopes with money as set in your budget. For example, if you have budgeted to spend $300 on rental, $500 on food and $40 on entertainment, then put $300 into the “Rental” envelope, $500 into the “Food” envelope and $50 into the “Entertainment” envelope. • When you plan a night out for some fun then take out the money from the “Entertainment” envelope. If you want to buy food, then use the money in the “Food” envelope.
